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What are sub limits and why are they important while buying health insurance

By Mr. Parag Gupta, Chief Underwriting Officer,

Bharti AXA General Insurance

Quick question: Your health insurance cover is Rs. 2 Lakh, your medical bill is Rs 1 Lakh. How much of your bill will get reimbursed when you make a claim? Most people think that they will get full reimbursement of the medical bill. Well, not really!  There is a possibility that you will only be partially reimbursed by your insurer. Which means you have to pay the balance amount of the bill from your own pocket despite having an insurance policy. But why? Because of sub-limits.


What are sub-limits?

Sub Limit is a monetary cap on certain components of your health insurance policy. They are usually expressed as a fixed value for a particular disease or treatment but can also be expressed as percentage of the total sum insured. It is inclusive in a policy and not an external addition.

There are two kinds of sub-limits that need to be kept in mind while one evaluates their health insurance policy.One is on hospital room rent and the otheron specific treatments.

Sub-limit on hospital room rent

Room rent cap is usually 1% of sum insured or a fixed value of rent per day. The limit of capping may be different for normal hospitalisation and ICU. In case your sum insured is Rs.2 lakhs, with the percentage cap you are eligible to stay in a room with a tariff of Rs. 2,000 per day.

Importance of sub-limit on room rent

The room rent capping has multi-fold impact in hospital charges such as doctor visit, surgery, nursing charges, operation theatre charges, fees of surgeon, anaesthetist, specialists andother medical expenses– these are all linked to the type of room you choose.

For instance:A surgical procedure may cost Rs. 20,000 in a twin-sharing room but Rs. 40,000 in a single room. Doctor’s visit may cost Rs.1,000 in a twin-sharing room but Rs.2,000 in single room.Say you choose a hospital room with tariff Rs.5,000 per day. Your total rent for 4 days is Rs.20,000. But your room rent cap in your health policy is Rs.2,000. The balance room rent of Rs. 12,000 (Rs.3,000 x 4 days) will have to be paid by you.

But not just the balance of room rent. Say all the other expenses such as doctor visit, surgery, medical tests for a Rs.5,000 room is Rs. 2lakhs, i.e. within your covered amount of Rs. 2 lakhs. But the same expenses cost Rs. 1.50lakhs in a Rs.2,000 room. You will have to shell out the additional Rs. 50,000.


Sub-limits on specific treatments

There is a sub limit on specific treatments which is mentioned in the policy details. However, the list of ailments under sub-limits and restrictions in treatment costs varies between insurance companies.In case the policyholder has a very high sum insured under their health insurance policy, it may happen that they will not be able to claim for their full hospitalization expense because of the sub-limit clause.

Importance of sub-limits on specific treatment

For instance:If there is a sub-limit clause of 50% of sum assured for cardiac ailment, then even if your sum assured is Rs.5 lakh, you cannot claim more than Rs.2.5 lakh.Say your medical expense for treating kidney stones comes to Rs.1 lakh. But your health policy had a sub-limit of Rs.40,000 for treatment of kidney stones. This means that the balance of Rs.60,000 has to be paid by you.

Points to keep in mind regarding sub-limits:

  1. Choose a health insurance policy without sub-limits, or after understanding in detail the applicable sub-limits in order to prevent surprises at the time of a claim
  2. Opt for a policy with a higher sum insured so that upper ceiling on sub-limits are higher as well
  3. Higher sum insured also means higher premium amount – so calculate your monthly expenditure accordingly
  4. You must read the terms and conditions of the health cover plan very carefully
  5. Go through the list of exclusions before selecting a policy that best suits your needs and finances

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